JP Morgan's Rod Hall Believes Apple Watch Hardware Is 'Excellent'

In his "Daily Download," JP Morgan's Rod Hall was in an Apple Inc. AAPL state of mind. The tech analyst reacted to recent reports that Apple was planning for a larger-than-expected initial run of the next iPhones and that the Apple Watch sales were slower than expected.

Despite what has been challenged sales thus far, Hall said that the Apple Watch reviews will need to get "materially more positive" after the OS 2.0 rolls out. Hall is bullish on OS 2.0 and said he believed it had "substantially better functionality." Additionally, the "fundamental Watch hardware platform is excellent," leading Hall to conclude that the OS update "could materially improve consumer interest."

However, Hall does point to the challenge that Apple has in front of it to reach his forecasted sales of 26.3 million. According to Slice Intelligence, the company is selling just 10,000 to 20,000 watches on a daily basis, down sharply from its initial launch. Further, two-thirds of the watches are the lower-profit "Sport" model.

Hall notes that there are brighter prospects for the iPhone heading into the December quarter, even given a "challenging" year-over-year comps. JP Morgan forecasted that Apple will sell 78.9 million iPhones in December, growth of 6 percent year-over-year. Some firms have much "more pessimistic forecasts that iPhone units will actually decline in the December quarter this year," Hall added.

Apple stock has come off 3.4 percent in the past month as the stock failed to gain above recent highs. Year-to-date, the stock is still outperforming the market, up 11.5 percent compared with gains of 4.7 percent in the Nasdaq 100.